The sorry state of the economy has eaten up hours of talk at Advertising Week. But in the good news column—for some agencies, anyway—there’s this: ad spend targeting Hispanics has yet to slow down.
The 2010 U.S. Census laid bare what the industry has known for a while: the demographic is exploding. Hispanic consumers now number 50 million—or 1 in 6 Americans—accounting for more than half of the nation’s increase in total population.
So, while growth in general-market advertising is slowing, marketing expenditures targeting Hispanics continue upwards, albeit not at the double-digit increases seen before the recession. In the first half of this year, for instance, Procter & Gamble shifted budgets into Spanish-language media at the expense of general market consumer magazine and TV (both broadcast and cable). And financial services and pharmaceuticals, which traditionally have not been very active in the Hispanic marketplace, are now boosting their ad spends.
For some multicultural shops, however, the good news has a downside: As investment levels increase, so does interest from general-market shops with established, big-client relationships. And their deep pockets means they can lure talent from these smaller agencies. In August, research firm IBISWorld released a list of the top 10 U.S. industries in which the Hispanic market share is growing the fastest. No. 5 on that list? Ad agencies.
“You’re seeing a lot of general-market agencies building their business at the expense of multicultural agencies,” said one industry insider.
Given the changing U.S. population, it’s an obvious business expansion. Last November, for instance, Ogilvy created OgilvyCULTURE, a cross-cultural strategic service practice, picking up work from marketers such as Kodak, Ikea, and British Airways.
Roberto Orci, chair-elect of the Association of Hispanic Advertising Agencies, which hosts its annual conference next week in Miami—as well as president of L.A.-based Acento—notes that in certain areas in the U.S., and for certain brands, the Hispanic market is even being considered the general market. His agency, he adds, has participated in general-market reviews, and has gone up against general-market agencies in Hispanic reviews.
Ingrid Otero-Smart, CEO of Interpublic’s Casanova Pendrill, says her Costa Mesa, Calif. agency is more likely to have a client give new Hispanic work to one of its general-market agencies than it is for Casanova Pendrill to come up against general-market shops in a new-business pitch.
Hispanic consumers, as a group, now have more discretionary spending power than any other multicultural segment. Otero-Smart, Casanova’s Pendrill’s chief, seems less concerned about the encroachment of general-market shops on her turf than she is about marketers’ slowness in heeding the wake-up call delivered by the recent Census findings.
“One of the issues we face is, ‘How do we get marketers beyond the 4-5 percent levels of spending?’ Their budgets should be two-to-three times bigger,” she says. “Competition from general-market agencies would be a moot point if that was the case—there would be enough business for everyone.”
October 7, 2011, 11:21 AM EDT
Fast Chat: Lori Senecal kbs+p’s CEO and president has changed her firm (and the industry) by innovating, motivating, and inspiring.
For every winning idea such as the Client Stock Index, how many innovations have you introduced at kbs+p that simply slipped through the cracks or didn’t pick up steam?
Well, I think we entertain a lot of ideas, and we try to be choiceful in the one’s we select. The Client Stock Index [which weighs employee incentives against campaign results] started as sort of an all-agency invitation to pitch ideas that would help advance us as a company. So there were literally 50 ideas that were brought forth by 50 of our employees. We selected the Client Stock Index as the top idea because it was such a no-brainer, given that if you wanted to create the mentality of aligning employee wealth and motivation with client success, it’s something really tangible that you can put in the culture. But I think the main thing is to entertain a lot of ideas and then be choiceful about the ones that you implement.
It sounds like a game of odds. Some of those ideas must fall flat.
I mean, absolutely. There are always going to be ideas that succeed and fail. But if you have good instincts, the odds will be in your favor. And if you don’t try, then you won’t have the success.
What’s the biggest challenge when you introduce an idea? Is it convincing the other partners, is it motivating employees, or is it an entirely different obstacle altogether?
Well, one of the things we did in order to create change is, first of all, engage people in it. So when I talked about that American Idol-style sort of pitch process to select an idea that we put into our culture to drive change, when people feel like they’re part of generating what that change is going to look like, they’re less fearful of it. And the other thing is that we have a value system here, which is “do things that matter.” It really puts an emphasis on doing rather than just talking about it all the time.
With such an emphasis on innovation, do you press your clients to be more innovative?
Absolutely. We’ve made real investments at the agency in terms of the technology. We have Spies and Assassins, which is our technology and innovation practice. We have the Test Kitchen. We have kbs+p Ventures. And all of those are designed to help our clients have a view into the future and be able to experiment with us, and be able to actually execute ideas that will help them drive change.
What will you be talking about at the panel?
The reason I was so interested in doing this panel is because Advertising Week’s mission has been described as “to inform and to inspire,” and I think that this seminar brings a third dimension to that, which is to apply—to actually be able to apply that information and inspiration. The areas I’ll probably talk most about will likely be focused on this purpose-driven organization of having a do-things-that-matter kind of value system. What that means is saying yes to entrepreneurs. So when you have people that bring ideas forward, it’s having a bias toward action and empowerment.
Considering how innovative you are, what companies do you think of as innovative?
Certainly a lot of technology companies. We also work with our great automotive friend, BMW. And one of its hallmarks is certainly innovation. But so I think you can see examples of innovations in most categories. There’s always someone blazing a trail.
Is there such a thing as too much innovation?
I think that change in our industry requires constant reappraisal of our practices and our perspectives. Ideas are born from multiple influences, and creativity is about looking at things in different ways. So I think innovation is a constant imperative.
October 7, 2011, 6:52 AM EDT
Michael Wolff Interview Part 1 Richard Kirshenbaum interviews Adweek's editorial director about Steve Jobs and reporting on the advertising business
October 6, 2011, 6:20 PM EDT
October 6, 2011, 6:19 PM EDT
Not all deal sites are created equal, said Beth Ellard, general manager of lifestyle website and newsletter DailyCandy.
Speaking on an Advertising Week panel on women and marketing, Ellard talked about DailyCandy's version of the now-ubiquitous daily deal. Other sites take "a little bit of a scorched earth approach," in the sense that they'll offer any kind of deal without caring as much about quality. So even if a site like Groupon sends customers to a mediocre spa, "you're not going to hate Groupon, you're not going to say 'I'm never going to use Groupon again.'"
DailyCandy doesn't have that luxury, Ellard said, because it has a stronger connection with customers, and they expect higher-quality curation.
"I am happy to have that higher standard, because that means we're building a business for the long term," she said.
Panel moderator Susen Credle, the chief creative officer at agency Leo Burnett, wondered if those deals have a limited value to most businesses. She recalled talking to one client who said they shied away from deal sites because it wasn't their goal "to give my stuff away." Ellard, however, said that samples and promotions "have always been part of the marketing mix."
Businesses are also struggling with the fact that the definition of loyalty seems to be changing. Ellard recalled a recent survey where most women said that "brand loyalty" means sticking with a brand for six months to a year—they're not exactly lifetime customers. In that context, Ellard said brands have to work to "earn that loyalty every day."
October 6, 2011, 5:32 PM EDT
Social media marketing is new, changing constantly, and for many, confusing as hell. Fortunately the nascent industry has no shortage of social gurus, ninjas, and wizards hawking their version of best practices to the masses.
In a presentation titled, “Will You Still ‘Like’ Me In the Morning?,” Paul Dunay, CMO of Networked Insights, warned marketers from stopping at their Facebook fan page when launching social marketing strategies. “They spend more time planning for the wedding than for the marriage,” he said. Having a snazzy Facebook page with a sizable fan base is the cost of doing business—everyone needs it (“Your fans expect you to be there, and you’ll lose them to the competition if you aren’t,” Dunay said). But many marketers don’t go beyond making a pretty page; they don’t realize that a mere .2 percent to 2 percent of a brand’s Facebook fans ever return to the brand’s homepage after initially “fanning” it. It means marketers need to focus on creating relevant content that keeps fans engaged with their brand through their news stream, he said.
Another way brands can be their own worst enemy on Facebook is by ignoring the mountain of data their fans willfully supply to them. Thanks to the availability of “fanships,” marketers have access to granular facts about their followings. A beer brand could learn, for example, that its fans’ favorite TV shows are The Simpsons and Family Guy, which is a valuable insight for making TV ad buys or even developing ad creative. It also creates right and wrong answers for marketing decisions, Dunay said. One brand he worked with was planning an event with Lady Gaga; after looking at Facebook fan data, the marketer realized its own fans weren’t that into the artist.
October 6, 2011, 5:27 PM EDT
It’s ok to fail. In fact, Taxi’s Paul Lavoie encourages it.
In a presentation on day four of Advertising Week, Lavoie preached experimentation and risk-taking. Also, rather than bemoan doubt or rejection, embrace it, because it may mean you’re onto something unconventional. Or, as Lavoie more colorfully put it, “Make ‘no’ your bitch.”
By way of example, Lavoie, chairman and co-founder of Taxi, showed two agency ads for Viagra that simply and colorfully sold the product without once uttering phrase, “erectile dysfunction.”
One ad featured two seventysomething men on a putting green. After one sinks a long put, the other says, “Can you believe that?” The first one replies, “Oh, that’s nothing. This morning I . . .” A giant Viagra pill then appears on screen over his mouth, muting his words. After he completes his thought, the pill disappears and his buddy guffaws. The ad ends with the message, “Talk to your doctor.”
Lavoie also asserted that thinking creatively is everyone’s responsibility, not just the creative department. In other words, left-brain people can use their right brain if they just slow down, turn off their phones and maybe take a walk.
To illustrate his point, Lavoie introduced Brian Bomeisler, an artist and SoHo neighbor who uses drawing to show people from all walks of life how to express themselves creatively. Each subject sketches a self-portrait at the beginning of a Bomeisler’s program and then another at the end. The first typically is rudimentary, almost childlike and the last is rich with detail and feeling.
The takeaway? “Creativity is more of a mindset than a skill set,” said Lavoie. Now, if we can just push back those client deadlines…
October 6, 2011, 4:11 PM EDT
Terrestrial radio isn’t going anywhere, according, unsurprisingly, to terrestrial radio execs. Even with the explosion of digital streaming services like Spotify, Pandora, and MOG, representives from Clear Channel, Emmis Radio, and the Radio Advertising Bureau made the case for the continued viability of their businesses in an Advertising Week panel at the Times Center in New York.
“It’s an ‘and-both,’ not an ‘either-or,’” said Charlie Rahilly, president of national advertiser platforms at Clear Channel Radio. Listeners aren’t single-minded about their music consumption, and they’re choosing more than one way to listen. “They use all the different utilities that are available,” he said. There is, they hope, room for everyone.
Of course, executives working in terrestrial radio are hoping none of the $800 million advertisers are expected to spend on audio this year will shift to digital services, where growth in inventory outstrips growth in ad spend. They’re banking their livelihood on people’s laziness. While services like Spotify are nice for on-demand music, not every user wants on-demand, the argument goes. “Some people want to be passive and have their listening experience curated. Let’s face it, we’re a lazy society,” said Alexandra Cameron, svp at Emmis NY, noting that a large chunk of Facebook and Twitter users are unengaged lurkers. Advocates of Spotify and MOG could argue that their playlists, recommendation engines, channels, and social features offer a simple solution to the lazy listener conundrum.
That doesn’t mean traditional radio companies aren’t bracing themselves. Clear Channel recently launched its digital service, iHeartRadio, and sells advertising in packages that include mobile, terrestrial radio, and digital. Emmis Radio is developing a smartphone-enabled service because the company is certain that the custom listening digital services “can’t continue to be free.”
And others aren’t so hopeful that traditional radio will be able to hold on to its ad dollars. Speaking at IAB’s MIXX Conference on Tuesday, Grantland.com founder and podcast host Bill Simmons said that when vehicles become Internet-enabled, “it’s all over.” Digital audio advertising, which currently earns only a small piece of the ad dollar pie, will likely explode at that point, he said. And that's a development he expects to happen in the next year.
Pandora svp of sales Steven Kritzman touted the “lean-forward” engagement of Pandora.com’s personalized stations and of its mobile listeners. Further, its users are registered, so advertisers can target audiences more specifically by factors like age and gender, versus terrestrial radio, which is limited to geographic and time of day targeting. It’s helped increase pricing for digital audio ads. But the digital audio advertising market is still in its infancy.
The Radio Advertising Bureau is working with IAB to spread awareness of digital radio (and, in turn, ad dollars), said Jeff Haley, president and CEO of RAB. “From 6 a.m. to 6 p.m., we are it, and there is inequity between time spent listening and advertising,” he said. “Daytime is the new prime time.”
October 6, 2011, 3:35 PM EDT
Advertising has become a multibillion dollar business on social networks, but Wired.com's John Abell wondered today whether the model is "sustainable."
Abell moderated a panel this morning at Advertising Week, so his remarks were probably intended to stir up conversation. He argued that there's a "social compact" on a site like Facebook—people get to use it for free thanks to advertising, but at the same time, as these sites become more ad-driven, they "no longer serve the consumer in that mythical way."
Barbarian Group CEO Benjamin Palmer agreed that if social networks "prioritize the advertisers over the users," they'll run into trouble, but he said that right now, the two groups seem to be "meeting in the middle." He also noted that there's a "game" aspect to the way brands can race each other to amass more fans on Facebook.
"It's all out there, it's all very public," he said.
Karl-Heinz Land, chief evangelist and senior vice president at MicroStrategy, added that social network ads can be useful for consumers, too. Rather than presenting someone with offers for a flood of products, brands can use social data to match everyone with the one offer that's best suited to them.
"Marketing becomes a concierge service," Land said.
Not all of the panelists were comfortable with that. Socialistic CEO Colleen DeCourcy argued that Land's suggestion doesn't take advantage of "the potential of the medium." Advertising isn't just about giving someone a soda when they want a soda, she said. Instead, it's supposed to create "meaning" and "culture."
October 6, 2011, 3:20 PM EDT
While practically everyone else is bemoaning their fate during a downturn, Miles Nadal has been capitalizing on opportunities. On Thursday afternoon, the founder and CEO of MDC Partners outlined his strategy for producing growth in the midst of a difficult economy in a one-on-one discussion - “Good Advice for Bad Times” - with journalist Nicole Lapin.
MDC’s leader looks to the words of Warren Buffett—who he referred to as “the world’s smartest man”—for practical guidance when it comes to the timing of acquisitions: Be fearful when others are greedy, and be greedy when others are fearful. “From 2001 through 2005, when the world was terrible we were quite ambitious. We were buying in a very uncertain market,” said Nadal. He operated according to that same playbook in 2008. “When the world was puking up, I got excited.” For her part, Lapin comically—yet astutely—responded to his metaphor by saying, “Well, you were holding America’s hair back as they were puking.” Still, Nadal is not waiting for a turn-around to forge ahead with growing MDC’s business: in 2010, the company completed 13 acquisitions.
Nadal, however, is not convinced that the ad world has hit a rough patch based on the dismal economic climate. “We’re not in a bad time. This industry is in a good place,” said Nadal, who highlighted that MDC experienced 24 percent organic growth during the first half of the year. He did point to widespread anxiety over the state of affairs in Europe and the U.S. housing market as factors creating great uncertainty. Still, of consumers, he said, “Despite all that, people are still spending. They don’t feel good, but they’re still spending.”
October 6, 2011, 3:18 PM EDT